Gold and silver are the most commonly talked about metals. In fact, bullion investors frequently look at the volatility of gold or silver in order to decide when is a good time to enter the market. However, investors should also consider the prices of gold vs silver (commonly referred to as the gold-silver ratio). But what about the difference between the volatility of silver and the volatility of gold? Is there a correlation?
The Main Differences Between Silver and Gold
When investors plan to buy gold coins, there is one argument that makes investors think twice and consider investing in silver instead. And that is that silver may be a better hedge than gold.
Both gold and silver are valued in U.S. Dollars. So when the US Dollar falls, the market expects precious metals to increase in value. As a result, specualting with purchasing bullion in other currencies may also be profitable. Because silver has a far greater industrial demand than gold, its price tends to increase with rising inflation against a decreasing USD.
Why Is Silver More Volatile Than Gold?
Bullion investors know that silver prices are more volatile than gold prices. This has been historically true too. The prime reason for this is supply and demand. However, metal volatility also factors in how investors view and value each of the precious metals. Silver is primarily an industrial metal, which gives it consistency in demand. Gold's demand is more related to investing and hedging.
The widespread usage and application of silver in the industrial sector can create high levels of volatility. During periods of economic growth the demand for silver continues to remain high, more so than any other precious metal.
However, because silver is an industrial metal its volatility is correlated to multiple factors. Silver is heavily used in the automotive industry, where the metal is crucial in the core manufacturing process. It is also used in electrical manufacturing, and in the jewelry and bullion trade. As a result, multiple industries will impact the demand and pricing of silver.
Conclusion
Historical market behavior shows that the market volatility concerning silver is far greater than that of gold. Investors looking to buy silver bars will no doubt benefit irrespective of the precious metal’s volatile nature.
Even if the volatility poses a challenging risk for an investor's management portfolio, its widespread industrial and retail value can be beneficial in the long run. If you would like to buy silver bars or coins, then consider the range of products at Suissegold.eu.
